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Greece, Birthplace of Democracy, Needs A Democratic Lifeline

No More Blood From A Greek Stone:

It appears Greece’s government has come up with a list of reforms it and its creditors can agree upon in return for 4 months of bridge financing to restructure the conditions of a longer-term growth strategy.

By trading structural reforms for fiscal space, each major player (Greece and Germany) is making major concessions in the name of pragmatism. Germany is relaxing its dogmatic belief  in fiscal targets to provide the Greek government with the fiscal space needed to restructure its economy without exacerbating its “humanitarian crisis”. Greece, in return, must officially bring to an end the era of lax tax collection and over-rigidity in the labor market.

Both sides are making major concessions, neither side is 100% happy, and its appears as if middle ground has been found–all signs of a meaningful compromise. One can only hope that when Greece’s list of reforms comes in on Monday, both sides of this debate remain on the same page:

Greece’s list of reforms to be submitted to the euro zone on Monday comprises pledges on structural issues such as tax evasion and corruption over the next four months without specific targets, a government official said on Saturday.

The accord requires Greece to submit by Monday a letter to the Eurogroup listing all the policy measures it plans to take during the remainder of the bailout period.

If the European Commission, the European Central Bank and the International Monetary Fund are satisfied, the Eurogroup is likely to endorse the list in a teleconference without the need for a formal meeting. Then euro zone member states will need to ratify the extension, where necessary through their parliaments.

There will not be specific figures or targets to be achieved tied to the goals, the official said, adding that the two sides had not yet discussed how Greece would be evaluated on the reforms.

EU officials and euro zone ministers said they had no reason to think Greece would not come up with a satisfactory list of measures on Monday night. However, some hawkish countries have insisted that if there are doubts, the Eurogroup would have to reconvene in Brussels.

Structural reforms are inherently difficult to implement. In order to make the difficult task of taking on strong interest groups politically possible, an overwhelming popular mandate is needed. The need for strong public backing becomes even more important during times of high unemployment, when those lucky enough to remain employed are (quite rationally) more afraid of losing their jobs.

According to a recent opinion poll, 68% of Greeks want a “fair compromise” with the EU; even after years of economic suffering, the vast majority of Greeks remain steadfast in their believe in the E.U.. Such support must be seized upon, it will not last forever.

What Greece needs now is a pro-growth, structural reform based bailout plan, not a continuation of its failed blood-from-a-stone internal-devaluation based “recovery”. Reducing it’s primary surplus while collecting greater tax receipts would open up the fiscal space Greece needs to both deal with its humanitarian crisis and create a safety-net for those adversely affected by labor market reforms as the economy readjusts. 

The past 6 years have had a deep psycho-economic effect on the Greek people. With overall unemployment at 26% and youth unemployment at 50%, to go along with a 24% contraction in GDP, the Greek economy has been ravaged. Lack of control over monetary policy (as all members of the Eurozone face) has limited Greece’s policy space, it must be allowed to regain some control over fiscal policy.

Greeks have suffered enough and have learned their lessons–these next four months are an opportunity to prove it. In addition to any external monitoring imposed as part of this deal, the Greek people must prove they can be their own corruption watchdog and can pay their taxes.

Fighting wealthy tax evaders may be a popular political platform and merited on social justice grounds, but in order to pay-down Greek debt without compromising human development, a widespread cultural acceptance towards paying taxes is required. There is no doubt Greece has been too lax in collecting taxes in the past, but this does not need to be an irrevocable problem. Through legislative reform and social accountability, Greece can overcome it’s culture of tax evasion.

Locking in long-term labor market reforms, without driving more people into poverty and exacerbating the “lost generation” of young Greeks, should be the mutual goal between Greece and it’s creditors. In fact, this could be a potential blueprint for other economically depressed European countries to renegotiate their social contracts with the EU. Democratic governance derives its legitimacy from the will of the governed; if peoples basic needs are not met, democratic governance cannot be sustained.

Greece is not in the clear yet. But by finding this acceptable middle ground, the foundations of a sustainable solution for keeping the Eurozone intact may have been laid.

Reversing the Democratic Recession:

Neither side of this debate should have to pretend that keeping the Eurozone unified is an unimportant political, economic, foreign relations and security consideration. Greece staying in the E.U. is important for Greece, Germany, the E.U. and any country with aspirations of democratic governance:

[Stamford University democracy expert] Diamond adds, “perhaps the most worrisome dimension of the democratic recession has been the decline of democratic efficacy, energy, and self-confidence” in America and the West at large. After years of hyperpolarization, deadlock and corruption through campaign financing, the world’s leading democracy is increasingly dysfunctional, with government shutdowns and the inability to pass something as basic as a budget. “The world takes note of all this,” says Diamond. “Authoritarian state media gleefully publicize these travails of American democracy in order to discredit democracy in general and immunize authoritarian rule against U.S. pressure.”

If anything, the U.S. has been the poster-child for prosperity through democracy compared to the E.U.. Regardless, twin “democratic recessions” of varying degrees on both sides of the Atlantic have compromised the appeal of democratic governance abroad. Spreading Islamophobia, antisemitism, and xenophobia throughout Europe–side effects of Europe’s failed economic policies–compromise the appeal of Western values and galvanize authoritarian and extremist messages. 

ISIS finds itself at Italy’s back-door geographically in Libya. But ideologically, ISIS could not be further away from European ideals. Ultimately, reversing the democratic recession and countering authoritarian and extremist ideals requires. among other things, proving democracy remains a viable path to widespread freedom and prosperity.

“Western” countries cannot push Greece towards China / Russia for a bailout. We, like Greece, finds ourselves at an inflection point–we must  prove that democracy in a first world country can satisfy peoples basic needs. Failure to do so could lead to a long-term setback in promoting modernization, human rights, and democratic governance in the worlds least developed countries.

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Awareness, Self-Interests, People Power, and The End of Poverty

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Inside the Bill and Melinda Gates Visitor Center in Seattle, WA

While finishing up my first business trip in Seattle, WA, I walked by the Bill and Melinda Gates Foundation. Due to my studies and interests, I was familiar with the organization’s important work in the related fields of Education, Healthcare, and Poverty Eradication both in the US and abroad. Intrigued, I went in.

While walking around the visitors center, I was struck by something I read. Explaining the origins of the foundation, a plaque stated that Bill and Melinda gates started their mission by providing Internet access to public libraries in America. Then, in the 1990s, Bill and Melinda “learned” of the extreme poverty affecting children around the world (specifically lack of access to medical care), and expanded the scope of their work.

This line took me a while to comprehend. Growing up during the age of globalization and global news coverage, the plight of people in the developing world was something I had always taken as obvious. How could it be that someone, let alone one of the smartest people in the world, would have to “learn” about these injustices later in life?

Then I began to think about what growing up in a hyper-connected world meant. For those who grew-up in previous generations, understanding the plight of people in the developing world required an active and time consuming search for information. Conversely, growing up in generations Y / Z, with globalized news coverage and internet access, not knowing about the existence of extreme poverty requires willful ignorance.

There are many self-interested reasons for wanting to  promote sustainable human development and end poverty, including: stopping violent extremism, stemming the “offshoring” of jobs to lower income countries through economic convergence, and creating new markets for sustainable trade-based growth (the Great Recession was a perfect example of the unsustainability of relying too heavily on financial innovations for growth).

But universal awareness will also play a large role in ending poverty (much like the first step to finding a solution is admitting there is a problem). The “silent majority” of the global community believes in basic rights and human dignity for all. It is in the long run interests of the global community, and resonates with mankind’s central tenets as ethical, social beings. Ultimately, it is this awareness which will galvanize the global effort to end poverty.

The Post 2015 Development Agenda is an important element of the fight to end poverty, as it will help direct trillions of dollars of public and private development resources over the next 15 years. Building on the successes (and learning from the shortcomings) of the Millennium Development Goals (MDGs), the Post 2015 Development Agenda is being drafted in an inclusive and consultary manner. Incorporating input from the very people it is intended to help, the agenda recognizes the importance of civil / political rights, good governance, multi-sectoral accountability, and self-determination in ending poverty. With human rights and empowering the world’s most vulnerable people at its core, the Post 2015 Development Agenda is poised to make great strides in poverty eradication.

As the world continues to get “smaller” and more interconnected, the costs of environmental degradation, human rights abuses (in relation to terrorism and protracted social conflict / genocide), and economic inequality will more acutely impact not only to the world’s most vulnerable, but also people in first-world countries (who have historically have considered themselves largely immune to such issues).

While it will not be easy, ours is the generation that must make meaningful strides towards ending poverty and promoting sustainable human development in the worlds least developed countries (LDCs). Failure to do so would gravely affect us all, and this (now) common knowledge is (slowly) creating unstoppable momentum towards positive, sustainable change.


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Transparency Report: China Speaks of Inclusion at UN, Cracks Down on Protestors in Hong Kong

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Pro-Democracy Protests in Hong Kong:

During China’s annual address to the UN General Assembly, Foreign Minister Wang Yi had an interesting message for the international community:

The new sustainable development agenda should advance people’s wellbeing, promote inclusivity and ensure implementation

Inclusive, participatory politics are a foundation of modernization theory / a human rights based approach to development. Coming from a Chinese official these words ring hollow, as they were delivered while the Chinese government cracked down on pro-democracy protestors in Hong Kong:

In a significant escalation of their efforts to suppress protests calling for democracy, the authorities in Hong Kong unleashed tear gas and mobilized riot police with long-barreled guns Sunday to disperse crowds that have besieged the city government for three days. But thousands of residents wielding only umbrellas and face masks defied police orders to clear the area.

At the heart of current protests are provincial elections in Hong Kong. The Chinese government is allowing these elections to take place, but will only permit certain candidates to run. To their credit, and against great odds, protestor’s have defied calls from the Communist Party to end their protests.

It has become clear the people of Hong Kong are willing to defy authority in their attempt to secure political rights. The protests have naturally gained much international attention, and have put the usually shrewd Chinese Communist party in a difficult position.

Polyarchy and a Context Sensitive Approach to Development:

Robert Dahl, one of the most influential political scientists of the 21st century, would probably consider Hong Kong an “inclusive hegemony”. Technical terms aside, even the casual observer should realize that, as they stand, Hong Kong’s elections would not represent a real democratic exercise (and hence the protests).

When it comes to human rights and poverty reduction, the Chinese experience is perplexing. Since 1981, the number of people in the world living in “extreme poverty” (less than $1.25 PPP / day) has fallen by 500 million people; excluding China, this reduction turns into an increase of 100 million people. One could certainly argue that the UN is not in a position to lecture China on the finer points of poverty reduction.

But China’s experience with development and poverty reduction cannot easily be replicated. Economic development is always context sensitive, and the least developed regions in the world (specifically Western / Sub-Saharan Africa and the Middle-East) must develop from starkly different contexts than China has.

China is generally a homogenous, stable country with a strong central government that effectively meets peoples basic needs. Generally speaking, modern day Western / Sub-Saharan Africa and the Middle-East couldn’t be more different; sectarianism / tribalism run rampant, and governments are corrupt and ineffective at providing even the most basic services. This combination results in instability, insecurity, and high poverty rates.

Any meaningful attempt at “South-South cooperation”–using the experiences of past development efforts when drafting new ones–would quickly identify these difference. While China’s economic development has been a remarkable success story, it would also be impossible to reproduce in today’s least developed countries (LDCs).

Furthermore, there are limits to the growth China’s can realize from it’s political economy model. While extreme poverty has dropped in China, the average Chinese person is by no means “wealthy”. The Chinese government has proven itself to be incredibly adept at picking the “low hanging fruit” of economic development. But it is widely accepted, even by Chinese leadership, that future growth and development requires a shift from export-based / state-sponsored growth to consumer-demand / market based growth.

The question is whether  this type of growth is possible in a quasi-capitalist, authoritarian country. Perhaps China will continue to be the exception to the rule, and become a highly developed nation without extending the political freedoms many of it’s people crave. I have my doubts, and recent slowdowns in China’s economic growth may affirm my beliefs, but admittedly a longer-term perspective is needed to see whether China’s economic slowdown is a symptom of structural flaws in its political economy or not.

Human Rights Records and Rankings:

It is worth noting that China is far from an outlier / renegade nation (such as North Korea). China is not, for instance, Egypt or Syria–countries whose leaders greeted pro-democracy protestors with indiscriminate slaughter. Furthermore, modern day China is not 1989 China; these are not the Tiananmen Square protests, times have changed and I am fairly certain the Chinese central government will not resort to violence in order to break up the protests.

China generally works within the international community, and is sensitive to negative perceptions that may affect its economic growth. The Communist party has proven itself to be in-tune with the needs of it’s people–whether this is out of some sense of good governance or a survival tactic is certainly open to debate.

It is difficult to rank countries based on their human rights records; human rights violations are interconnected and their consequences difficult to quantify. One such organization that attempts to rank countries, the International Human Rights Rank Indicators, has China ranked 48/216. This rank is below most of the world’s wealthiest countries (which has a lot to do with a governments ability to fulfill economic and social rights), but ahead of many of the worlds poorest / most oppressive regimes; I would say this is a reasonable ranking.

Growth and Development:

The ability of the worlds LDCs to develop, and of China to continue to develop, should be of great concern even to those in the “developed” world. If the Great Recession has proven anything, it is that “financial innovation” is not a sustainable path to prosperity. Wealthy countries need new markets to export their goods–they need people in poorer regions to obtain greater purchasing power. This means the international community must be clear-eyed when assessing the merits and limitations of the Chinese growth model.

For the world’s LDC’s, I am fully convinced that a human rights based approach to development is needed. The Post-2015 development agenda–with a human rights and a context sensitive approach to development at its core–is being designed with the world’s most impoverished in mind. I am cautiously optimistic that this second iteration of the MDGs will make a meaningful impact in the battle to end extreme poverty and expand human dignity in the worlds poorest regions.

China will not take outside advice when determining its future policy choices. China does not need international economic assistance, so there is no mechanism for implementing outside advice (regardless of its merits). If democratic gains are to take hold in China, it will require a combination of internal pressure (protests) and a continued slowdown in China’s economic growth.


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Green News: The Roles of “Rich” and “Poor” Countries in Combating Climate Change

Major Polluters: 

A rule proposed by the Enivironmental Protection Agency would cut carbon pollution from power plants 30 percent from 2005 levels by 2030 – the equivalent, according to the agency, of taking two-thirds of all cars and trucks in America off the road. Here are some things to know about the rule:

• The E.P.A. expects that under the regulation, 30 percent of electricity in the United States will still come from coal by 2030, down from about 40 percent today.

• The rule is not an executive order. Under the Clean Air Act, the E.P.A. is required to regulate any substance defined as a pollutant, which the law defined as substances that endanger human life and health. A 2007 Supreme Court decision led to an E.P.A. determination that carbon dioxide is a pollutant, thus requiring that the agency regulate it or be in violation of the law.

• The rule will not, on its own, lower greenhouse gas pollution enough to prevent catastrophic effects of climate change. But, in combination with other regulations, it would allow the United States to meet its commitment to the United Nations to cut carbon pollution 17 percent by 2020 and press other major polluting countries, particularly China and India, to follow suit.

Energy production accounted for 26% of global GHG emissions in 2008, the largest source by sector. If the United States can cut its own emissions from energy production by shifting towards renewable energies and natural gas, and pressure other leading emitters to follow suit, this could significantly mitigate the environmental damage caused by carbon dioxide emissions. Countries such as China and India will point to comparatively high levels of U.S. per capita emissions to counter pressure from the U.S. to reduce their emissions.

Least Developing Countries (LDCs):

Access to energy is an essential component of modernization, poverty alleviation, and economic development. According to the International Energy Agency, 1.3 billion people (18% of the global population) live without access to electricity, 95% of which live in Sub Saharan Africa or developing Asia. In order to reconcile two fundamental components of sustainable human development–environmental sustainability and [extreme] poverty alleviation–the worlds least developed countries will need to satisfy their energy needs from low / zero emission sources.

There are a number of reasons to believe LDCs will rise to this challenge. As largely agrarian economies, LDCs face the negative impacts of climate change directly; food / water insecurity and communicable disease patterns are directly affected by changing climate patterns. Furthermore, because traditional energy infrastructure by definition does not exist in places without access to energy, the perceived “sunk costs” associated with renewable energy are largely non-existent.

However, LDCs face one large impediment to clean energy production–cost. As refined production techniques, market penetration, and creative financing drive down the price of renewable energy in the developed world, it is imperative that the technology gap be bridged to include LDCs in the renewable energy revolution. If the 18% of the global population without access to energy instead gain access to dirtier forms of energy, the actions of developed countries to combat climate change could be almost entirely negated.   

Despite this cost gap and shortfalls in pledged financing from developed countries, developing nations accounted for 43% of new renewable energy investment in 2013 ($93 billion out of a global total of $214 billion). However, only $9 billion of this investment came from Sub-Saharan Africa. Efforts to provide financing for renewable energy to those who currently lack access to any form of energy are at crux of sustainable human development, and must be scaled up immediately.

To this end, developed countries have pledged $100 billion per year in “climate aid” by 2020–if realized this would more than double investment in renewable energy in LDCs. Developing a global network of carbon taxation / cap and trade policies (or even a less ambitious patchwork of policies by the worlds largest emitters) can provide a steady revenue stream to ensure such aid is delivered.

Which countries are considered “rich” (and therefore are donor countries), and which countries are considered “poor” (and therefor aid recipients)? Once consensus is reached on this contentious issue, the question of how much aid each specific donor country should contribute remains (between historically high emitters / high per capita emitting “rich” countries, and current high emitting “emerging economies” such as China and India). These are the  challenges world leaders must work together to overcome while drafting the Post-2015 Climate Agreement / Sustainable Development Goals (SDGs).

Neither “rich” nor “poor” countries can adequately address global environmental risks alone–concerted action is needed.  


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Green News: Access to Energy, Poverty Reduction, and a Reason to be Optimistic About Renewable Energy Use in the Developing World

The image shows projections for COemissions and global temperature changes based on different scenarios. Since we cannot know the future of environmental policies, technological advances, or economic growth, projections based on are the best way to hypothesize about these issues. One thing should become apparent after viewing these graphs–while the future is yet undetermined, failure to take action will have dire consequences.

Economic development is an essential component of poverty reduction in the worlds least developed countries (LDCs). However, economic development /poverty reduction are impossible without increased access to energy. Looking at the UN’s “My World 2015” survey, most of the 16 variables “for a better future” rely, to varying degrees, on energy access.

Original article:

In a speech on Monday in Warsaw, the United Nations’ top officer on climate change warned coal industry executives that much of the world’s coal will need to be left in the ground if international climate goals are to be met.

Godfrey G. Gomwe, chairman of the World Coal Association’s energy and climate committee, responded in a speech that, with “1.3 billion people in the world who live without access to electricity,” the questions of climate change and poverty reduction could not be separated.

“A life lived without access to modern energy is a life lived in poverty,” said Mr. Gomwe, who is also chief executive of the mining company Anglo American’s thermal coal business. “As much as some may wish it, coal is not going away.”

Todd Stern, the United States envoy on climate change, said at a news conference in Warsaw that the world’s reliance on coal is “not going to change overnight.” But, “high efficiency coal is certainly better than low efficiency coal,” he added, noting that carbon capture and storage technology was “the most important hope” for coal’s future.

Does this mean that the goals of (extreme) poverty reduction and environmental sustainability are incomparable? No, international efforts for poverty reduction have taken place in the context of “Sustainable Development“. While coal will not “go away”, the chief executive of a coal business is hardly an unbiased agent–he is likely to overstate coals importance in the global energy portfolio. In order to reconcile these two goals, LDCs must meet growing energy demands primarily with zero / low emissions renewable energy sources.

I, for one, am optimistic that LDCs will pursue sustainable development. This is not blind optimism, it is based on political and economic realities.

In the U.S., renewable energy industries face the impediment of strong, established “traditional” energy industries (such as coal power). These industries have billion dollar profit margins and employ large numbers of people. Furthermore, infrastructure or “energy grids” already exist which may not be able to distribute renewable energy, representing large “sunk costs” to switching to renewable energy. In sum, these factors lead to strong local level support and national lobbying efforts for traditional electric. The benefits of renewable energy are realized in the future, while the costs (higher energy prices) and resistance from special interests occur in the present.

In LDCs, where many people are “off the grid”, these “incumbency” obstacles do not exist. In LDCs, people rely primarily on the agrarian economy, and are therefore more likely to support environmentally sustainable energy sources. Furthermore, “off-the-grid-renewable energy” represents a way of bypassing the large fixed costs associated with building traditional energy grids–something that is extremely important in the context of the world’s poorest countries:

Sub-Saharan Africa is also seen as a promising context for renewables. An analogy with the region’s adoption of mobile phones suggests sub-Saharan Africa could dispense with polluting, grid-connected power plants – just as it skipped landline telephones — and move straight into distributed generation from renewables.

Yet a note of caution enters any forecast for any region that so consistently outwits the sharpest analysts. Bhattacharyya tallies up several points for optimism but, while sharing Cohen’s enthusiasm, expresses doubt about the scale of development.

‘The market-driven approach’ has started to ‘flourish’ in areas such as Kenya, he says. He also sees grounds for optimism in how global attention on the lack of access to clean energies by agencies such as the UN, IEA and World Bank has also raised local recognition and awareness of the issue.

In ‘an optimistic case’ he forecasts that sub-Saharan Africa could add a few gigawatts through off-grid technologies, bringing electricity to millions of its people.

‘There is surely huge potential for off-grid options but it is difficult to tell how much is really likely to materialise,’ he says.

The issue with financing renewable energy projects was supposed to be addressed by the UN Green Climate Fund; developed countries promised $100 billion a year to the developed world by 2020 to help cope with and reverse climate change. Issues over “common but differentiated responsibilities“, as well as austerity measures in response to the Great recession, call the availability of these resources into question.

One potential means of making up this funding gap is through a so-called “feed in tariff“:

The report by the World Future Council says providing feed-in tariffs for developing countries so that they can finance setting up large-scale renewable systems and feed electricity to their grids is the best way forward for the fund.

Feed-in tariffs provide the owners of small or large-scale wind and solar arrays with a guaranteed price for electricity over 20 years, so the investor is certain to get a return on their capital. The scheme has worked in developed countries like Germany and Italy to rapidly boost renewable output.

An added problem in developing countries is making sure that the national or local grid can take up and use the electricity generated. Some developed countries have already had difficulties with this, so sorting out the grid must be part of any financing package, the report says.

The report envisages 100 gigawatts of electricity being funded in this way by 2020 – the equivalent of the output of 100 large-scale coal-fired power plants. This would cost 1.3 billion euros a year to fund, sustained over two decades. 

Feed-in tariffs require energy grids to feed-into, and for that reason are not a viable option for the most impoverished / remote areas in the world which do not currently have traditional energy grids. For areas in the developing countries with traditional grids, this is a viable solution. For other areas, financing for off-the-grid renewable energy must be made available. The ability to reconcile economic development, environmental sustainability, and poverty reduction–sustainable development–depends on it.

Update: Alternatively, perhaps off the grid renewable energy can be stored in batteries and sold as part of a feed-in tariff. I know advances are being made in large scale renewable storage in large batteries, I wonder if there is a way to make this work on a small scale as well. Just a though…